Bitcoin miners are halting activity in Texas amid concerns the energy grid will buckle under a prolonged heat wave and cause rolling blackouts across the state, Bloomberg first reported.
Texas is one of the largest crypto-mining hubs, by computing power, in the world. For crypto mining companies such as Riot Blockchain Inc., Argo Blockchain Plc, and Core Scientific Inc., low energy costs and a lack of regulation on crypto mining were the perfect reasons to open large-scale industrial operations in the state.
However, the heat wave pushing across Texas has energy prices on the rise and profitability on the decline.
Energy usage for miners broke an all-time high last Friday, hitting 78,206 megawatts. This has forced miners to cut back on usage until the state has a better handle on its energy situation. The previous record was 77,460, set on July 5, according to data from the state’s power operator Electric Reliability Council of Texas (ERCOT).
ERCOT works closely with miners and requires them to turn off mining machines when the state faces energy shortages.
Low energy costs are crucial to crypto mining, which relies on millions of energy-intensive computers to solve complex coding problems, secure the Bitcoin blockchain network, and award miners with bitcoin.
Lee Bratcher, president of the Texas Blockchain Council, said ERCOT’s request to turn off machines resulted in over 1,000 megawatts worth of Bitcoin mining being halted temporarily. “This represents nearly all industrial-scale Bitcoin mining load in Texas and allows for over 1% of total grid capacity to be pushed back onto the grid for retail and commercial use,” he told Bloomberg in an email response.
Plummeting cryptocurrency prices, $4 billion worth of loans, economic uncertainty, and high borrowing costs have made it a major challenge for Bitcoin miners to bounce back to profitability.
The largest cryptocurrency by market cap, Bitcoin fell from its all-time highs of $69,000 in November 2021 to just under $20,000 today. In response to the growing pressure, the industry has laid off thousands, and Core Scientific sold 2,000 bitcoins in June to cover operating costs.
With no sign of the Texas heat wave letting up, the crypto winter seems more like a crypto ice age for many Bitcoin miners.